How to handle a notice from builder demanding extra charges in Mumbai?

Question

I booked a flat in Mumbai with a builder, and we had agreed on a price of ₹75 lakhs. Suddenly, I received a notice demanding an extra ₹5 lakhs for 'unforeseen construction costs'. This was never discussed or agreed upon. The builder is now threatening to cancel the booking if I don't pay. I feel cornered and don't know if this is even legal. What legal steps can I take to contest this demand? Please help!

Adv. Neha Joshi · Accepted Answer

Hi there! I understand how stressful this situation must be. Let me break down your options under Indian law to help you address this issue.

Firstly, it's important to refer to the Real Estate (Regulation and Development) Act, 2016, commonly known as RERA. This Act was specifically designed to protect homebuyers and ensure transparency in real estate transactions. Here are the key steps you can take:

Review Your Agreement: Check your sale agreement or allotment letter thoroughly. Under RERA, the builder cannot add extra charges unless explicitly mentioned in the agreement. Look for any clauses related to cost escalation or unforeseen charges.
File a Complaint with RERA: If the demand for extra charges is not backed by your agreement, you can file a complaint with the Maharashtra Real Estate Regulatory Authority (MahaRERA). Builders registered under RERA must adhere to the terms agreed upon.
Send a Legal Notice: You can send a legal notice to the builder disputing the demand for extra charges. This notice should clearly state your position, refer to the agreement terms, and mention that you are willing to take legal action if necessary.
Consumer Forum: If the issue remains unresolved, you can approach the Consumer Disputes Redressal Commission, as this is a clear case of unfair trade practice. The Commission can help in obtaining a fair resolution.

Regarding legal precedents, the Fortune Infrastructure v. Trevor D'Lima (2018) case is relevant. The Supreme Court held that builders cannot arbitrarily alter terms or demand extra payments not agreed upon in the contract.

It's important to act quickly. Here are the deadlines you need to keep in mind:

Filing a complaint with RERA: Ideally, this should be done as soon as possible to ensure swift action.
Consumer Forum: The limitation period is two years from the date of the cause of action (i.e., when you received the notice).

Since I am a junior advocate, I strongly recommend consulting a senior advocate to guide you through these processes effectively. They can help draft the legal notice and represent you in proceedings, if necessary.

Stay firm and don't feel pressured into paying without verification. You have legal avenues to protect your interests.

📚 References:

Adv. Priya Mehta · Answer

I'm sorry to hear about the stress this situation is causing you. It sounds frustrating and unfair, especially when you've already agreed on a price. Let's break down your options.

The short answer: The builder cannot legally demand extra charges unless such a provision was specifically included in your original agreement. You have the right to contest this demand.

Under the Maharashtra Ownership Flats Act, 1963, developers cannot unilaterally increase the price of a flat unless there is a clear clause in the agreement allowing them to do so. If the demand for additional payment was not part of your original contract, you are not obligated to pay.

Here's what you should do next:

Review Your Agreement: Carefully go through your sale agreement to check if there is any clause that allows the builder to charge extra for unforeseen costs. If such a clause does not exist, the demand is likely unlawful.
Respond in Writing: Send a formal response to the builder disputing the extra charges. Clearly state that this was not part of your agreement and that you do not acknowledge any obligation to pay.
File a Complaint with RERA: The Real Estate (Regulation and Development) Act, 2016, known as RERA, protects buyers from such practices. File a complaint with the Maharashtra RERA authority. Their website provides a straightforward process for lodging complaints.
Consider Legal Action: If the builder persists, you may need to initiate legal proceedings. You can file a case in the consumer court for unfair trade practices and breach of contract.

In cases like these, builders often rely on the fact that buyers may not challenge them legally. However, courts have consistently ruled in favor of buyers in similar situations. In Fortune Infrastructure vs Trevor D' Lima (2018 SC), the Supreme Court held that builders cannot impose such charges unilaterally.

Note: You should act promptly as any delay might be construed as acceptance of the builder’s terms. Filing a complaint with RERA should ideally be done within a reasonable time after receiving the notice.

Feel free to share the actual notice or agreement if you need more specific advice. Understanding the exact wording can be crucial in cases like this.

📚 References

Adv. Sanjeev Malhotra · Answer

Handling a notice from a builder demanding extra charges can be a challenging situation, especially when such charges were not part of the original agreement. Here's how you can approach this issue legally: Review Your Agreement: First, thoroughly review the agreement or contract you signed with the builder. Look for clauses related to pricing, escalation charges, or unforeseen costs. Builders often include clauses allowing for cost escalation due to specific reasons. However, such clauses should be clear and specific. Check RERA Registration: Ensure that the builder and the project are registered under the Real Estate (Regulation and Development) Act, 2016. RERA provides protection to home buyers and mandates transparency in transactions. Builders cannot arbitrarily increase prices without valid reasons and proper documentation. Send a Legal Notice: If the demand for extra charges is unjustified, consider sending a legal notice to the builder through a lawyer. The notice should clearly state your objections to the additional charges and demand adherence to the original agreement. File a Complaint with RERA: If the builder is registered under RERA and is acting in violation of the Act, you can file a complaint with the Maharashtra RERA authority. RERA authorities have the power to adjudicate disputes between builders and buyers. Approach the Consumer Forum: If the builder's actions constitute an unfair trade practice or a deficiency in service, you can file a complaint with t

Adv. Pallavi Joshi · Answer

Dealing with a builder demanding extra charges that were not initially agreed upon can be quite distressing. Here’s how you can approach this situation legally in Mumbai: Review Your Agreement: The first step is to thoroughly review the agreement or contract you signed with the builder. Check if there is any clause that allows the builder to charge extra for unforeseen costs. If no such clause exists, the demand for additional payment is likely unjustified. Check RERA Compliance: Since your property is in Mumbai, it falls under the jurisdiction of the Maharashtra Real Estate Regulatory Authority (RERA). Builders must register their projects with RERA and adhere to the terms disclosed. You can file a complaint with RERA if the builder is non-compliant or if there is a breach of the agreement. Consumer Protection Act: You can file a complaint under the Consumer Protection Act, 2019, as demanding extra charges without prior agreement could be considered an unfair trade practice. The Consumer Forum can provide relief in such matters. Legal Notice: Consider sending a legal notice to the builder through an advocate, clearly stating your objections to the additional charges and demanding adherence to the original agreement terms. Approach NCLT: If the builder is a corporate entity and you are facing issues like mismanagement or oppression, you may consider approaching the National Company Law Tribunal (NCLT) for relief, especially if you are part of a group of buyers facing similar

How to handle a notice from builder demanding extra charges in Mumbai?

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